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WASHINGTON, D.C.  The Department of Justice and Federal Trade
Commission today issued a joint letter urging the Virginia State Bar to
reject a proposed opinion from bar members that would prevent non-lawyers
from competing with attorneys to perform real estate closings.

The Department and the FTC said that the opinion will likely result in
higher real estate closing costs and fewer choices for consumers.

"Without competition for these services, Virginians are likely to see
their real estate closing costs go up," said Anne K. Bingaman, Assistant
Attorney General in charge of the Justice Department's Antitrust Division.
"Consumers should be able to pick the service that's right for them. It's
difficult enough trying to buy a home, let's not make it even more costly
or difficult for those trying to grab a piece of the American dream."

The proposed opinion would require consumers to use a lawyer for
settlement when they buy and sell property, and when they refinance their
mortgages or obtain a home equity loan.

Currently, Virginians can use a non-lawyer settlement service, such as a bank, title company, or builder.
A number of banks provide closing services for refinancings and home equity
loans for free.

As stated in their joint letter, the Department and the FTC said that
the opinion has the potential to increase prices in two ways.

First, the opinion will force consumers who would not hire a
lawyer to do so. Second, without competition from non-lawyer settlement
services, the prices that lawyers charge will likely go up--resulting in
higher costs for consumers.

In the early 1980s, private bar associations tried to stop competition
from non-lawyer services in real estate closings and trust and estate
services. The Justice Department sued these associations for violating the
antitrust laws and obtained court orders prohibiting the illegal conduct.

For 15 years, consumers have had a favorable experience with choosing
between non-attorney services and attorneys in Virginia, the Justice
Department and FTC said. The agencies said that legal questions may be
much less likely to arise because standardized forms are used for
mortgages. Also, legal questions are particularly less likely to arise
when home equity loans and refinancings are involved since consumers have
already gone through the closing process once.

The Department said that consumers in much of the country can choose
between lawyers and non-lawyer services. Just last year, the New Jersey
Supreme Court rejected an opinion that would have required lawyer closings.

Uninformed consumers can be protected by measures far less
anticompetitive than an outright ban on non-lawyer closings, the antitrust
agencies wrote. For example, the New Jersey court required written notice
of the risks involved in closing without a lawyer.

Although the Virginia bar's proposed opinion would allow attorneys to
delegate tasks to non-lawyers, an attorney would still be required to
actively oversee the settlement.

The opinion, proposed by the Virginia State Bar's Standing Committee
on the Unauthorized Practice of Law, must be approved by the council of the
bar and the Virginia Supreme Court to be binding. The opinion would
declare non-lawyer closings to be illegal. Approval by the Virginia
Supreme Court would likely protect the rule from a later challenge by
federal antitrust agencies. This is why the agencies chose to express
their concerns through the attached letter.